Volume-5, Issue-6, June - 2016 • ISSN No 2277 - 8160 IF : 3.62 | IC Value 70.

36

Commerce
Research Paper Commerce
Outreach and Efficiency of Inclusive Banking Through
Technology in Tamil Nadu

Dr. C. Ph.D. , Assistant Professor of Commerce, Periyar E.V.R.College,

PARAMASIVAN (Autonomous), Tiruchirappalli, Tamil Nadu

ABSTRACT Financial inclusion is one of the means for overall economic development of a country.The
growth of the retail banking industry fosters financial inclusion by providing financial products and
services to people in the rural areas of the country. The nationalization of prominent commercial banks has improved
the banker customer relationship.The measures taken by the Reserve Bank of India and other regulatory bodies
have strengthened the banking industry and have raised the level of confidence in the minds of the public about the
banking sector.The banking history has undergone tremendous changes in the last few decades

KEYWORDS : Banking Industry, Financial Inclusion, Customer Relationship,

Inclusive Banking, Banking Technology

INTRODUCTION
Banking is one of the unavoidable segments of socio-economic develop-
ment of the country, which leads to increase in employment opportuni-
ties, industrial growth, and infrastructural development, human resource
up gradation, poverty eradication, capital formulation, and speedy deliv-
ery of capital flow. Banking industry in India is well organized and reg-
ulated by various autonomous& statutory bodies such as RBI, banking
Companies Regulation Act, FEMA, and Negotiable Instruments Act etc.
Computerization in banking sector has taken serious steps towards ru-
ral and unreached population in the country. Presently there are 101261
branches with more than one lakh ATMs across the country. However, it
could cover only 65 per cent of the People and remaining 35 per cent of
the people are far away from banking facilities offered. In this situation,
RBI has introduced financial inclusion in 2006 with the massive effects on
providing financial services at an affordable cost with the help of informa-
tion technology. With this view, this article would provide an opportunity
to understand the issues and challenges of inclusive banking in India.
REVIEW OF LITERATURE
The following reviews help to understand the issues associated with
the problems, and also help to bridge the research gap from the ear-
lier studies.
Atul Raman (2012) in his study found out that around 45% of pop-
ulation in India suffers from poverty and hunger 31% has access for
banking services. In India 403 million population are mobile users
in which 46% of theme do not have bank account. On all India basis
41% of adult population in the country are unbanked where as rural
area coverage in 39% against 60% in urban areas.
Krishnakumar.R and Vijayakumar.L (2013), jointly reported a
study on the financial inclusion program in selected bank inclusion. The
study is main objectives of the research were to identify the approach-
es adopted by different banks and the customer response towards the
banking approaches under financial inclusion program. The study con-
cluded that though the banks are complying with RBI norms in terms
of opening branches within areas of at least 2000 population, offering
no frills account, Kisan credit card still a lot of efforts are to be put in for
financial inclusion progress.
Shobna Vasudevan and Aparna Ghaisas( 2011) jointly at-
tempted a study on the importance of basic banking facilities in
economic growth of a country. The study refers to connectivity to
banking services as a major factor impacting sustainable and inclu-
sive growth. Similarly, banks should concentrate on financial literacy
campaigns so that people will be aware of the banking service made
available to them and how and why they should take fuller utilization
of the same.
GJRA - GLOBAL JOURNAL FOR RESEARCH ANALYSIS X 160
Ashima thapar (2013) found out the steps taken and different ap-
proaches adopted by the banks in the area of financial inclusion. As
per this study, more than 50% of the bank branches have started im-
plementing the program in areas with a population of at least 2000
i.e. rural areas. The study concludes that though the banks are com-
plying with RBI norms in terms of opening branches within areas of
at least 2000-Population, offering, no frills accounts, Kisan credit card,
simplifying KYC norms, still a lot of efforts need to be put in for finan-
cial inclusion progress.
Paramasivan.C and Ganeshkumar.V (2013) jointly discussed
in the study, financial inclusion for the purpose of opening account
in Pondicherry. It concludes that rural branches of the banks may be
equipped with motivated and trained staff having some marketing
skill and knowledge on appraisal of small loan after opening “no frills”
account, and proper measures may be made to organize them into
groups for uncalculating the habit of thrift which will ultimately ena-
ble them to avail credit facilities.
Shabna Mol TP (2014) in the study investigated the financial inclu-
sion in India to promote sustainable development in rural areas. The
study analyzed the level of awareness about financial inclusion forces
and examined the extent of financial inclusions among below pover-
ty line households in terms of access and continuous usage of bank
account. This work concludes that most of the BPL households are
included in the financial inclusion system in terms of access of bank
account.
Prema Sharma Bamoriya and Preeti Singh (2012) suggested
that from customer’s perspective, mobile hand set operability, securi-
ty; privacy and standardization of services are the major challenges of
mobile banking in India.
Himani Sharma (2013) in the study on bankers’ perspective on
e-banking, opined that, there is not much awareness among Indian
customers regarding use of e-banking services.
Sahil Mahajan (2014), concludes that mere opening of no-frill
bank accounts is not the purpose or the end of financial inclusion
while formal financial institutions must gain the trust and goodwill of
the poor through developing strong linkages with community-based
financial ventures and cooperative.
Alphina Jos, Denny George et al (2010) ,noted that ,Open-
ing a No Frills Account only to receive government benefits is not
the gateway into the financial system that RBI intended. Our inter-
views indicate that for many poorer customers, NFAs are merely an
imposed - and not universally convenient - means for withdrawing
IF : 3.62 | IC Value 70.36 Volume-5, Issue-6, June - 2016 • ISSN No 2277 - 8160

wages earned through NREGA or for benefits in other government 3. Atul Raman “Financial inclusion and growth of Indian a banking system”, VOL-1, Issue-
programmes. 3, journal of business and management. Pp25-29, 2013.
4. Chakrabarty, Inclusive Growth – Role of Financial Sector,” National Finance Conclave,
PROBLEMS IDENTIFIED KIIT University, Bhubaneswar, November 2010.
The primary reasons for poor financial inclusion in India are economic 5. Himani Sharma,”Bankers perspective on e-banking” http//www.publishingindia.com,
in nature. Both saving and borrowing are low and the geographical Economic Times of India Sep 24 and Dec 20th, 2012.
spread of the rural customer makes it uneconomical for banks to set 6. Krishnakumar and Vijayakumar “The effectiveness of the financial inclusion products”
up branches close to them to serve them profitably. As a result, the Vol- 2, Issue-6, International journal of Commerce, Business and Management, Pp
majority of bank branches in India are concentrated in urban areas 457-465, 2013.
and large towns and last mile access remains a hurdle in regular use 7. Paramasivan and Ganeshkumar “Operation efficiency of financial inclusion in Pondi-
of banking services. Most of the banks have begun to take an innova- cherry”, Vol- 4, Issue-17, SELP journal of social science, Pp84-88, 2013.
tive approach towards banking with objective of creating more value 8. Prema Sharma Bamoriya and Preetisingh, Issues and challenges of mobile banking in
for the banks. Some of the significant changes in the banking sectors India,http //www.iiste.org.
are; telephone banking, internet, online banking, mobile banking, 9. Reserve Bank of India, Circular on Financial Inclusion, November 2005 Sahil Mahajan,
ATM provisions and credit card facilitating cash transactions by the Financial Inclusion & Indian Banking Sector, The International Journal Of Business &
customer using the unique personal identification number. The tech- Management (ISSN 2321 –8916), Vol -2 Issue- 1 January, 2014
nological innovations pave way to the banker for the inclusion of rural 10. Shabna Mol “Awareness and access of financial inclusion drive a study of below pover-
customers ty line households in Kerala,” Vol- 3, Issue- 4, Global journal of commerce & manage-
ment perspective, Pp 201-204, 2014.
Technology is the only instrument, which helps to reach the banking 11. Shobna vasudevan and Aparna Ghaisas “Evolution of social banking in India accom-
services to unbanked people, and it simplifies the procedure involved plishments and challenges”Vol-3, Issue-2, Asia Pacific journal of Marketing & manage-
in banking transaction. Technology in banking not only promotes the ment review, Pp36-47,
speedy, accurate, transparency, safety of the banking transaction but
also facilitates the awareness on importance and impact of banking
services. Indian banking industry, today is in the midst of an IT revolu-
tion. A combination of regulatory and competitive reasons has led to
increasing the importance of total banking automation in the Indian
Banking Industry. The bank, which used the right technology to sup-
ply timely information, will see productivity increase and thereby gain
a competitive edge. To compete in an economy, which is opening up,
it, is imperative for the Indian Banks to observe the latest technolo-
gy and modify it to suit their environment. Information technology
offers a chance for banks to build new systems that address a wide
range of customer needs including many that may not be imagina-
ble today. RBI has taken serious steps towards the inclusive banking
through technology in the following ways such as Opening of no-frills
accounts, Relaxation on know-your-customer (KYC) norms, Engaging
business correspondents (BCs), Adoption of EBT, General credit cards,
Simplified branch authorization and Opening of branches in un-
banked rural centers. However, the banking services have not reached
the unreached people in the country though the governments have
taken serious steps to provide bank accounts to all the people in the
country. To provide banking services to the unreached, the Prime
Minister launched the National Mission on Financial Inclusion a
named as Pradhan Mantra Jan Dhan Yojana (PMJDY) in the national
capital on August 28, 2014. In this regard, there is a need to measure
the outreach and efficiency of the inclusive banking through technol-
ogy in Tamil Nadu.

SOCIAL RELEVANCE AND USEFULNESS

Inclusive banking is a part of financial inclusion, which is the need
of hour. To meet this urgent need, the Prime Minister Shri Narendra
Modi launched the Pradhan Mantri Jan Dhan Yojana (PMJDY), which
is a major initiative to link the hitherto excluded poor with the banks
with the aim of bringing them into the economic mainstream. Finan-
cial inclusion is being achieved under the new scheme with a mission
mode.

Launching the scheme the Prime Minister said that not even 68 per
cent of the populations have bank accounts, 68 years after independ-
ence. He said that if 40 per cent of Indians are not part of the econo-
my, how we could be successful in eradicating poverty. Out of 19.9
crore households in India, only 6.82 crore households have access to
banking services. In rural India out of 13.83 crore rural households,
only 4.16 crore rural households have access to basic banking servic-
es. In this regard, the proposed research study would be greatly useful
to understand the impact of the technology in inclusive banking with
reference to unreached rural people in Tamil Nadu.

References
1. Alphina Jos, Denny George, Shivshankar and Stanley V. Thomas,“Exploring Reasons for
Dormancy in No Frills Savings Accounts In Tamil Nadu”, MicroSave – Market-led solu-
tions for financial services,2010.
2. Ashima thapar “A study on the effectiveness of the financial inclusion program in In-
dia,” Vol- 3, Issue-6, International journal of business and management research, Pp
211-216, 2013.

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